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An important feature of the Affordable Care Act (ACA) is the penalty tax imposed on people who do not have health insurance. But newly updated report from the Congressional Budget Office projects that just under 4 million people will pay the penalty in 2016, less than 15 percent of the estimated 30 million people who won’t have coverage that year. That’s both good and bad news.

The good news is most people potentially subject to the penalty tax will obtain coverage. Of the 30 million people who CBO says won’t have insurance, 23 million—more than 75 percent—will be exempt from the tax. They include people with religious objections to health insurance, American Indians, people who are in jail, or are “not lawfully present” in the U.S., among others. There’s also no penalty if coverage would cost more than 8 percent of income. And in the many states that have refused to expand Medicaid coverage as the ACA allows, people who would have been covered under that program will also be exempt from the penalty.

That leaves 7 million uninsured who will be subject to the tax in 2016, less than 3 percent of the nonelderly population. In other words, CBO says the combination of the individual mandate, premium subsidies, and the penalty tax will induce most people to obtain coverage.

So what’s the bad news? Of the 7 million people who will owe tax, CBO says more than 40 percent won’t pay. Some will get exemptions for hardship or other reasons—that’s a good thing. But others will, in CBO’s understated words, “try to avoid payments.” Under the ACA legislation, the IRS has limited ability to collect the penalty. It cannot, for example, garnish wages as it could to recover other tax underpayments.

CBO’s bottom line on penalties: 3.9 million people will pay a total of $4.2 billion for 2016, an average of about $1,075 per person. Roughly 60 percent will come from people with income too high to get ACA premium subsidies—more than 400 percent of federal poverty guidelines. According to CBO, in 2016 that will be about $48,600 for a single person and $99,000 for a family of four. For those higher-income people, the penalty will average more than $2,000 a person, a pretty hefty bill for opting to remain uninsured. (If you want to see how large the penalty might be for a given situation, check out our ACA penalty calculator.)

The penalty tax could explain why more people obtained health insurance during this year’s open season than the administration projected. Once people focused on how much they’d have to pay if they didn’t get coverage, many may have decided to sign up. The impetus provided by the tax was undoubtedly much larger than the number of people paying it suggests.